Penny Wise: Five Easy Ways to Stop Wasting Money

Raising a family can be a fearsome resource drain. Even if you live in a comfortable two-income household, you’re probably shocked once the bills are paid every month to discover how little you have left over for yourself and your spouse. These five quick tips will save you money and position your family for the future.

1. Pay Your Credit Card Balances in Full

Look at it this way: even if you have good credit, carrying a monthly balance on your credit card is costing you at least triple what you’d earn if you were keeping the same amount of money in a high-yield savings account. There’s no reason to lose 10 percent of your money to interest charges each year when you have the funds to zero out your balances every month, but you’ll need to cut back on some discretionary purchases to make this happen.

2. Avoid Low-Yield Drains

Your family’s savings accounts probably pay absurdly low rates of interest for the privilege of using your money, which may be negative in real terms once you factor inflation into the equation. Ironically, there’s more competition than ever for your surplus funds these days, which should push interest rates up. Your solution: use the Internet to your benefit and search for the highest rates on online savings accounts and certificates of deposit (CDs). You can double or even triple your effective interest rate if you know where to look.

3. Avoid Protection Payment Insurance

Protection payment insurance is one of the least effective forms of insurance on the market. Lenders market it as a means of protecting yourself or your family from financial ruin by covering the payments on outstanding bills and loans for a fixed period if you die or become unable to work, due to injury or illness. Unfortunately, many protection payment insurance claims are rejected outright, thanks to sneaky fine print and disagreements between insurers and their clients. Certain life insurance policies offer a far better return.

4. Buy a Used Car

Gone are the days when used-car salesmen inspired only apprehension and derision in the educated car-buying public. Today, they may be your wallet’s best friend. Other than the odometer reading, there’s virtually no difference between a new vehicle and a two-year-old “pre-owned” vehicle of the same make and model. Keep this in mind next time you feel yourself being talked into buying a brand-new car.

5. Don’t Make Impulse Purchases

This is a general rule with many real-world ramifications. In addition to responding negatively to over-the-phone or in-person solicitations, try to make a shopping list when you to go the store or retail website and ignore anything that’s not on it. For families on a tight budget, this can be the difference between carrying a costly credit card balance and fully paying the bills each month.

These five money-saving tips are a good starting point for any cost-conscious family. Remember, the little things do add up, so keep careful track of your purchases and don’t be swayed by the impulse to eat an overpriced restaurant meal or buy the latest riding mower. If you live within your means, you’ll have more money to spend on things that matter, like your kids’ education.

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